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Learning Technologies is trading ahead of expectations

The successful integration of NetDimensions into the group has realised synergies on time and to budget, with considerable success in renewing contracts and winning new customers
The full-year dividend has been hiked to 0.3p from 0.21p in 2016

E-learning specialist Learning Technologies Group PLC (LON:LTG) saw its shares gain 5% on Monday after the firm said current trading is ahead of expectations, leading Numis Securities to raise its target price for the AIM-listed firm.

It is the second time this year the company has raised guidance; in January the group advised the market that earnings would be “materially ahead of market expectations at not less than £14mln” and so it proved, with EBIT coming in bang on £14mln, up from £7.0mln the year before.

WATCH:Learning Technologies Group keen to bulk up in North America

Revenue of £52.1mln was up 84% from £28.3mln in 2016. Recurring revenue accounted for 39% of total revenue, up from 27% in 2016, while revenue from outside the UK rose to 46% of the total from 36% the previous year.

“The growth in recurring revenue provides us with greater visibility and supports our investment for long-term shareholder value as we scale the group globally, broaden our capabilities and deepen our client relationships," said Jonathan Satchell, the chief executive officer of Learning Technologies.

Amortisation of acquired intangibles widened to £7.76mln from £3.2mln, which was a major contributor to the discrepancy between Ebit and statutory profit before tax; the latter was positive at £692,000 versus a loss the year before of £1.19mln.

Learning Technologies ended the year with net cash of £1.0mln, compared to a debt position of £8.5mln at the end of 2016. The group, no stranger to acquisitions, said it has a strong pipeline of strategic acquisition opportunities that are being actively pursued.

Trading in 2018 has been ahead of management’s expectations with the group enjoying a healthy order book. Increased sales and strong margins provide confidence for the year ahead, the group said.

"I am delighted by the achievements in 2017 and excited that the success of our NetDimensions transaction has transformed the scale and range of our acquisition opportunities," said Andrew Brode, the chairman of Learning Technologies.

Shares higher, Numis raises target, estimates

In late afternoon trading, Learning Technology shares were 4.8% higher at 87p.

In a note to clients, analysts at Numis raised their target price for the stock to 101p from 90p and reiterated a 'buy' rating.

They said: "LTG has reported very strong final results, with PBT/EPS of £13.4m/2.06p comfortably ahead of our forecasts (£13.0m/1.90p), which we upgraded at the preclose update."

The analysts added; "It states that trading for the new year has started ahead of expectations and we raise our PBT/EPS forecasts by +7% on an underlying basis."
  -- Adds broker comment, share price --



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